Ben Gilbert: evaluation

Transcript context

…-then that falls off a cliff. By 1973, the assets of the Wellington Fund have fallen all the way from $2 billion at the time of the merger down to $483 million. So over three-quarters of the assets in the fund and thus three-quarters of the revenue to the management company, poof, up in smoke. Now, all of that wasn't because of the assets decreasing in value. A lot of that was redemptions where investors are taking their money and going elsewhere. But it doesn't matter to the management company. For them, AUM is AUM. And this is—somebody made this point to me in research. Management companies of investment firms have phenomenal operating leverage, as we talked about earlier. As you are growing your funds under management, you don't have to scale your headcount, your operations, or your costs in the same way. And so you can get this amazing operating leverage and profits.…

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